Peter Schiff: If US Stays on Current Path, We'll Be the Next Greece

Greece's bankrupt economy and uncertainty could be replayed in America unless we heed the lesson that "this is what happens when politicians promise more than their taxpayers can pay," according to financial analyst Peter Schiff.

In an interview Monday with "Newsmax Prime" host J.D. Hayworth on Newsmax TV, the CEO of Euro Pacific Capital warns "[T]he only thing that really separates the [United States] from Greece is that Greek creditors have figured out that Greece is broke and America's creditors are still delusional."

"They still think that we're good for our debts and the only reason that delusion is possible is because interest rates are still at zero… were interest rates ever allowed to rise, it would become obvious that we can't pay our bills and we would have a crisis similar to what Greece is looking at now."

Schiff says Greece "should be a lesson."

"This is what happens when politicians promise more than their taxpayers can pay," he says. "Politicians on both sides of the Atlantic are guilty of this. They pander [to] the voters, they make all sorts of promises and when the bills come due, it's a crisis and they're going to come due in more countries than Greece."

"They're going to come due in America and unfortunately there's a lot more bills that we can't pay," he adds.

Schiff explains the problem is "quantitative easing" — when the "central bank monetizes government debt by creating money out of thin air and spending it into circulation."

"That's the fate that awaits Greece if they return to the drachma," he says. "The Greeks don't want to accept cuts to their pensions, but if they end up getting their pensions in drachma instead of euros, those pension payments will be worth a lot less."

The same thing could happen in the United States, he contends.

"We're not going to change currencies, but the only way the U.S. government can make good on its obligations is to print the money," he says. "When they do that, the money is not going to have very much value when the Social Security recipients or the bondholders ultimately get paid."

The example of Germany after World War One looms for both Greece and America in a worst-case scenario, where it will take "wheelbarrows" to cart around the money needed for the simplest of items.

"If Greece goes back to the drachma, they very well may end up having to cart them around in wheelbarrows and the same thing could happen with the [United States," he says. "If we stay on the path that we're on … you may in fact need wheelbarrows to take them to the grocery store."

Greece's bankrupt economy and uncertainty could be replayed in America unless we heed the lesson that this is what happens when politicians promise more than their taxpayers can pay, according to financial analyst Peter Schiff.
In an interview Monday with Newsmax Prime ...